Growers must manage 2022 high input costs

STARKVILLE -- High fer­tilizer prices continue to be a hot topic any time farm professionals gather, but now is not the first time costs have doubled or even tripled for some crop staples.

Larry Oldham, soil spe­cialist with the Mississippi State University Extension Service, said producers must plan around dramati­cally rising costs.

“Some December re­ports show potash prices nearing historic high prices over $800 per ton, and in­dividual nitrogen fertilizer prices increasing 5% to 9% within one month,” Old­ham said.

While these high prices can seem staggering, fer­tilizer price increases of this magnitude have hap­pened before.

“The late 2000s was the time of the great fertilizer price reset,” Oldham said. “Potash prices had been 14 cents a pound for many years, but increased do­mestic and international grain demand more than quadrupled the price for potash.”

Oldham said that means the current fertilizer price volatility is not uncharted territory.

“This is a moment for pa­tience as the storm swirls,” Oldham said. “Large-scale components -- some antic­ipated and some not -- in­teracted in late 2021 to develop the current situa­tion. We anticipate these interactions will continue through winter.”

Speaking at the 2021 Row Crops Short Course in December, Brian Mills, an agricultural economist at the Delta Research and Ex­tension Center in Stoneville, said this input volatility makes crop plan­ning for 2022 difficult.

“Enterprise and planning budgets are built annually with the MSU Budget Gen­erator,” Mills said. “We gather data from Missis­sippi companies on costs such as herbicide, pesti­cide, fertilizer and equip­ment, and a multidisciplinary team de­velops the budgets based on common production practices and recommen­dations.

“The big thing for 2022 is the input costs are signifi­cantly higher than the pre­vious year, and they went up after the data was col­lected in October,” he said. “Actual costs will vary for each producer, and it is important for you to do your own cost estimates and determine what your breakeven will be for the coming year.”

Mills said careful plan­ning and management is needed for a farm to break even financially.

“If you develop an enter­prise budget, you can plan out where costs can be cut, and you can deter­mine which crop will be most profitable for your situation,” Mills said.

Since no one can antici­pate market prices with certainty, growers trying to make crop decisions for the 2022 season can take steps to limit their costs.

“We should concentrate on components of the pro­duction system we can control,” Oldham said. “Many variables determine the ultimate success of a crop, such as variety selec­tion, water management, insects, nematodes, dis­eases, weed pressure and climate.”

One way to cut high input costs is to be effi­cient with fertilizer applica­tion. Careful soil tests determine phosphorus and potash fertilizer needs and help avoid overappli­cation of these nutrients. Then, be sure to apply at the best time and in the best way for highest effi­ciency.

MSU’s Enterprise and Planning Budgets, along with the MSU Budget Gen­erator and various Deci­sion Tools that can be used to manage farm costs, can all be found at https://www.agecon.msstate.edu/whatwedo/bud­gets.php. Visit http://ex­tension.msstate.edu/lawn-and-garden/soil-testing for information on soil testing and how to submit sam­ples to the MSU Soil Test­ing Lab.